Question
LRNA Company issued $380,000, 7%, 10-year bonds on December 31, 2017 for $408,268. This price resulted in an effective-interest rate of 6% on the bonds.
LRNA Company issued $380,000, 7%, 10-year bonds on December 31, 2017 for $408,268. This price resulted in an effective-interest rate of 6% on the bonds. Interest is payable semiannually on June 30 and December 31. LRNA uses the effective-interest method to amortize bond premium or discount. Instructions (a) Show the set up of the basic bond information. (b) Prepare an effective interest amortization table through December 31, 2019 (the first four interest payment dates.) (Round to the nearest dollar.) (c) Prepare the general journal entries to record the following. (1) The issuance of the bonds on December 31, 2017. (2) The payment of interest and the premium amortization on June 30, 2018. (3) The payment of interest and the premium amortization on December 31, 2018.
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